The Doctor Is In –Dickeson

Dr. Quincy was a reactionary. He looked at what has happened, not what is to be. Let’s react to job costs. Let’s do a Quincy and examine the job bodies after the production “crimes” have been committed to truly learn from experience. When we multiply standard transaction costs by actual results we are doing this. We forsake virtual reality for the real world. No predictors, just actual experience, converted to some common denominator of dollars.

With this usage we’re prepared to do internal benchmarking. Our benchmarks are the results of all the other jobs we’ve done in the past. It’s our own set of actuarial experience tables. But it only works in groups of similar jobs.

Group the actuarial experience of jobs. Compare account group X with account group Y. Constantly ask “Why did we make money on this group and lose on that one?” Where and what are the job differentiators? Think. Discuss. Then think and discuss some more. We’re mining the database of experience for the gold that’s in it.

The attitude shouldn’t be to worry about the accuracy of the transaction costs. Freeze ‘em, lock ‘em into place. Call ‘em standard costs and leave ‘em alone. Forget budgeted hourly rates. We want all jobs and customers to be relative to each other, and to the past, so we hold those costs as constants while actual performance supplies the variables. Always multiply actual performance by the same transaction values to make groups of jobs and accounts directly comparable.

Now we can do some real internal benchmarking! We don’t give a hoot about how close these “standard” costs come to the profit opinion of our general ledger system.

Is this group job pathology an academic exercise? No way. We’re into pragmatic marketing analysis. We’re looking at our own experience with work and customers. We have a steering wheel to drive our marketing machine. We have to find and fulfill needs at a real profit contribution, not some opinion of a gain. If we don’t make a real contribution we don’t survive.

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